The medial septal region and the hippocampus are connected reciprocally via GABAergic neurons, but the physiological role of this loop is still not well understood. In an attempt to reveal the physiological effects of the hippocamposeptal GABAergic projection, we cross-correlated hippocampal sharp wave (SPW) ripples or theta activity and extracellular units recorded in the medial septum and diagonal band of Broca (MSDB) in freely moving rats. The majority of single MSDB cells (60%) were significantly suppressed during SPWs. Most cells inhibited during SPW (80%) fired rhythmically and phase-locked to the negative peak of the CA1 pyramidal layer theta waves. Because both SPW and the negative peak of local theta waves correspond to the maximum discharge probability of CA1 pyramidal cells and interneuron classes, the findings indicate that the activity of medial septal neurons can be negatively (during SPW) or positively (during theta waves) correlated with the activity of hippocampal interneurons. We hypothesize that the functional coupling between medial septal neurons and hippocampal interneurons varies in a state-dependent manner.